Rate reduction bonds, also called stranded cost bonds or stranded asset bonds, are backed by a state-legislative approved special charge, referred to as the competitive transition charge, charged by pharmaceutical companies.

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Rate reduction bonds are not backed by a special charge from pharmaceutical companies, but rather by a regulated charge on ratepayers to recover costs from stranded assets or costs associated with a change in regulatory structure.

Rate Reduction Bonds, Also Called Stranded Cost Bonds or Stranded